Thursday, April 24, 2014
The Unaccountable Care Act
The Other Stealthy ObamaCare Menace: The Center for Medicare and Medicaid Innovation Exists to Impose Price Controls and Limit Payments To Providers
Title of OP-Ed article, by Lanhee Chen and James Capretta, Wall Street Journal, April 23, 2014
Another title for the health law, other than “The Patient Protection and Affordable Care Act, “ might be “The Provider Rationing and Unaccountable Care Act.”
As Lanhee Chen of the Hoover Institution and James Capretta of the American Enterprise Institute observe.”
“The Affordable Care Act’s Independent Payment Advisory Board has been so heavily criticized for being an accountable body with the power to effectively ration Medicare services that many congressional Democrats no longer support it.”
It is unaccountable for good reason. The Independent Advisory Board and its bureaucratic cousin, the Center for Medical and Medicaid Innovation – never has to go back to Congress to get an appropriation. ObamaCare gave it $10 billion , upfront to cover its first 10 years, and after that, it can get another $10 billion – no questions asked. Meanwhile it will grow from its initial 68 employees to 440 full time workers by 2015.
And what has the Independent Advisory Board (IPA) and the Center for Medicare and Medicaid Innovation (CMMI) done?
The IPA has done nothing. Its so-called 15 “experts,” who were to be charged with the duty of limiting hospital and physician reimbursements, have yet to be appointed.
The CMMI has been busy promoting Accountable Care Organizations (ACOs), herding doctors into hospital-physician organization, to “save” Medicare and Medicaid money, talking about “bundling” hospital-physician services, and engaging in slashing payments to Medicare Advantage plans, to which 30% of Medicare recipients belong.
The IPA-CMMI agency’s mindset is that the federal government is best positioned to lead a medical innovation effort through demonstration projects.
At this effort, it will surely fail. As I pointed out in my book The Health Reform Maze: A Blueprint for Physician Practices (Greenbranch Publishing, 2010), government is poor at innovation.
· It cannot manage failure.
· It seldom abandons a project.
· It is not gambling with its own money.
· Its success is measured with good intentions, not results.
· It succeeds by growing too big to fail and too influential to stop.
· It cannot go out of business, can print money to keep going, and is propped up by taxpayer money.”
To this list I would add, it is secretive and can hide behind its bureaucratic shield and its media protectors.
Innovation comes in many forms- electronic, organizational. communicative , and technological. Lately, social networking through Twitter, Facebook, and YouTube have gotten the greatest play. Government is not one of the forms that is destined to win any innovation honors. Paradoxically, at least in the government’s eyes, only deregulation and market-competition, not bureaucratic micromanagement, will achieve what government says it wants to happen.
Tweet: 2 government agencies, Independent Payment Advisory Board and Center of Medicare and Medicaid Innovation, will fail to contain costs or to innovate.
Wednesday, April 23, 2014
Physicians: Regulation by Insurers, Or Direct Pay Competition?
The use of traveling is to regulate imagination by reality, and instead of thinking how things may be, to see things as they are.
Samuel Johnson (1709-1785), Boswell
I’ve been traveling around the country by phone, interviewing physicians to see how things are, rather than what they might be.
The traditional thinking among federal officials it that government and insurers can lower costs through regulation by:
- making physicians comply with federal mandates;
- paying them through approved codes;
- compelling them to follow practice guidelines;
- using middlemen to restrict procedures and tests that can be done;
- judging their performance and paying them accordingly using evidence-based data.
This is logical if your desire is to control and lower costs, or the “bend the cost curve down, ” and if you believe in the power of government to dictate events at the market level.
The problem is that physicians are a cantankerous bunch who insist on exercising their own autonomy and clinical judgment. They are not, nor do they choose to be, indentured servants of the U.S. government or the insurance industry.
Switch from Dependence to Independence
Switch from Dependence to Independence
So something big is going on out there. Doctors are switching their business model from insurance-dependence pay to independent-direct-pay. This switch goes by various names, “free market health care.” direct pay independent practice, “ “cash-only medicine,” “transparent medicine,” or “concierge medicine.”
As the movement matures, physician leaders have grown to dislike the term “concierge” because the concierge stereotype implies direct-pay care is only for the affluent.
This has not proven to be the case. For various reasons – high premiums and deductibles secondary to ObamaCare, long waiting lines, unpredictable and mounting costs, rushed doctor visits, lack of privacy and confidentiality, patient desire for access to a private physician who has time for them, complexities of enrolling in health exchanges - ordinary citizens of all income levels, the insured and uninsured, primary care practitioners and specialists, and self-funded corporations are finding direct-case medicine as an attractive alternative . Not only is the care more direct and convenient, but it may lower individual and overall government cost and minimize bureaucracy.
Furthermore, it has generated a growing group of patients who are choosing to remain uninsured (Abby Goodnough, “Looking at Costs and Risk, Many Skip Insurance, “ New York Times, April 21, 2014). And, according to the Medscape 2014 Compensation Survey, 100,000 physicians out of America’s 900,000 physicians are participating in direct pay independent/concierge practices and in other forms of cash-only practices.
The magnitude of this return to free market principles and physician competition as a means of reducing costs and fostering convenience and satisfaction is unknown at this point. Nor, for that matter, on the other side of the government-market equation, is the number of Americans known who will eventually enroll in ObamaCare exchange plans to obtain subsidized federally-approved health plans or to avoid financial penalties called for the health care law.
There’s a wild card in all this as well. It is possible that the direct pay, 3rd party avoidance movement, could be rendered irrelevant by state or federal laws making care for Medicare, Medicaid, or other federal agencies a condition for practicing.
Tweet: A contest testing the viability and reliability of government-insured care versus free market care direct-pay care is emerging.
Tuesday, April 22, 2014
Interview with Daniel Goldberg, Founder of Free Market Health Group
Daniel Goldberg, a 29 year old entrepreneur who has worked in the health care field for 6 years, believes the time has come in which self-funded corporations, ordinary citizens, and physicians are seeking a transparent and affordable alternative to government and insurer care.
Q: What is your position?
A: I am founder and president of the Free Market Health Group. I am an outspoken advocate of free market principles and transparency. We also serve as consultants for physicians who are entering cash-based practices in a free market system. We deal mostly with specialists – orthopedists, spine surgeons, and other specialists who perform procedures not requiring hospital care.
Q: What motivated you to form this group?
A: With the new regulations with ObamaCare, we started to see a lot of physicians becoming disenchanted with the current medical system and further disenchanted with ObamaCare regulations. Many of them, primary care doctors and specialists alike, have expressed a desire to leave the insurance-based system and to enter a more fee-for-service or cash-based practices . They just weren’t sure how to make this a viable business model, after having been in the insurance system for 20 or 30 years.
Q: What prepares you to provide this vision of how this might be done?
A: Our vision is that the more physicians leave the system, the better we could serve the people in the market for cash-based surgery, the uninsured, and those who did not want to use their insurance network.
We realize a lot of patients, despite the ObamaCare enrollment numbers, are still uninsured and need to be served, as well as those with high deductibles plans.
Also there is a proliferating trend towards direct pay by employers who self-fund medical claims of their employees. Typically, these employers are used to paying hospital-based managed care fees. With physicians entering the free market and competing on price and quality, self-funded employers want contracts with high quality physicians at significantly reduced rates.
Q: Do you think there’s a significant hunger among self-funded employers for this new model?
A: Absolutely. What we saw that made us sure this new model was viable was when Walmart and GE, who together have one and a half million employees, created direct global fee contracts for hip and knee replacements with four hospitals across the country. Walmart and GE told their employees if they chose to go to one of these pre-determined centers, the employer would absorb the entire cost. For employers, the rates were low even with the employer paying the full amount.
Q: And this was outside the realm of current 3rd party reimbursement?
A: Right, this was a direct contract between employers and medical providers. This skirted the insurers. Employers were funding the claims directly themselves. This did not necessitate insurer involvement. There was no need for the insurance bureaucracy.
Q: There are a couple of slogans or buzz phrases you use repeatedly. One of them is you are creating “A transparent system of medicine.” Amplify on that please.
A: In America, everybody shops for everything from cars, computers, toasters, and housing based on price and quality. You cannot judge price and quality in a heavily guarded, secretive health care pre-arranged system based on a price system between insurers and larger hospital systems.
Both sides don’t want patients to know what medical care actually costs. When the patient sees a bill saying the hospital charged you $25,000 for a knee replacement, but you only paid them $8000, people say,”Oh, Thank God, I have insurance because I could never have afforded that.”
The reality is that rate was agreed upon well before you entered the operating room and well before you were even a patient. The financial system you see in medicine as the average patient isn’t real if you want to know what the insurance system’s role or the costs actually are. And you cannot predict beforehand what costs will eventually be.
Q: Another phrase you use is “ A physician mass exodus.” Explain please.
A: The policy of Association of American Physicians and Surgeons (AAPS), that patients should pay directly when care is provided, is a perfect example. In the last decade, many AAPS-affiliated primary care physicians have left the insurance-based system to form concierge practices. Primary care physician have spearheaded this movement. It’s been a very successful model.
Specialists took that mindset. When patients need surgery, specialists have created a global fee-for-service model. With that in mind and with fee-for-service reimbursement going down, specialists are leaving the insurance system and entering the free market, and not allowing themselves to be paid less. They are choosing to opt out or disassociate themselves from insurance, and that’s become a trend with the best physicians in the country.
Eventually, patients are going to walk into the physician’s office, and the doctor is going to say, “I don’t take your insurance. This is my cash-rate for medical care.”
Our job is drive down that cash-rate by making the physicians compete against each other.
Q: There are models out there showing this does work. The Surgery Center in Oklahoma, now in existence for 17 years, is a prime example.
A: Yes, Doctor Keith Smith, founder of that center, is a pioneer in this field.
Q; One of the things I ran across in doing interviews with direct pay physicians was that they are contracting with specialists for direct-pay discounts, and that is bringing their mutual interests together. This is a powerful incentive in bringing specialists into the free market.
A: Absolutely. For primary care direct pay physicians, certain things are going to be outside their scope of practice, like rotator cuff surgery. Typically, the only alternative was to go to a hospital. If the primary care physician affiliate with specialists, it gives their patients a larger care path and another option. That’s a great thing. Direct-pay care is no longer relegated to primary care. Now both primary care and specialists are operating under the same model.
Q: Do you think this transition to free market care is concentrated in certain affluent markets, like New York City?
A: No, the traditional mindset was always that if you’re going to charge a cash-fee, only 1% to 2% of people could afford that fee, and that can only occur in places with a high concentration of the wealthy. That has proven to be untrue, because as the price goes down more and more people can afford cash care. This includes those who are uninsured, either electively or because of financial circumstances. Those people are in all parts of the country.
Opening up cash-only facilities is not something that needs to be demographically targeted.
In New York City, there a lot of concierge physicians and a lot of concierge surgeons, but that’s true of all markets.
Q: What I found in my interviews with direct-pay independent physicians, is that they were surprised, even stunned, by the mix of patients availing themselves of their services. It turns out direct-pay medicine isn’t just for the affluent. Direct pay doctors are receiving calls from the uninsured, who are looking for rapid uncomplicated unbureaucratic access and the insured, who are motivated by the fact their new premiums and deductibles are not out of reach.
A; Yes, candidates for cash-only care are people who want a high quality of care and who don’t want to be directed based on insurance. The greatest insurance policy in the world is not worth it if your doctor are not spending enough time with you, or are not answering all your questions, or is not available when you need them.
These people are seeking out direct/concierge physicians who have the time and resources and who have enough time to spend with them to answer their questions and who know them as persons and not just numbers in line, with transparent pricing up front. People want a high level of care are not restricted to those with high incomes People want to be treated as best as possible by a physician who knows them and who spends time with them.
Tweet: Free market health care in the form of direct-pay independent primary and specialty care is growing rapidly in the United States.
Health Reform: Gloom for Improvement
He flung himself from the room, flung himself on his horse, and rode madly off in all directions.
Stephen Leacock (1869-1944), Canadian teacher, political scientist, and humorist
In the next 3 weeks I am giving talks before a group of hospital chaplains and an association of conservative physicians. These are 2 divergent audiences, with different views of the world.
In these talks, I hope to show there is always gloom for improvement – room for puns, poems, apps, prose and cons – on health reform. In a pluralistic, multicultural, vast, far-flung, continental nation like the U.S., there is always room for differences. One size does not fit all. It never will, despite pressures for homogenization. standardization, and collectivization.
People with a need for care, especially politicians and those with resources, will always find ways to get that care, there will always be a need for a social safety net, and there will always be differences on how to provide that net.
We are a resilient, resolute, compassionate nation, and we will work things out for most of the people most of the time. We will realize you cannot fool all of the people all of the time, and you cannot please all of the people all of the time. Somewhere there is always a middle ground, for the upper, middle, and lower classes. We just have not found it yet.
Perhaps with health reform, we never will. Across the blog, all health delivery systems have multiple tiers. As the U.S. drifts left with ObamaCare, other developed nations with aging populations are moving right - frenetically introducing private insurance and cash-only schemes to cope with unsustainable expense of centralized national systems. These systems are a drag on their economies and produce long waiting lines, rationing, and unhappy citizens looking for timely access to personalized care and more time spent with physicians.
In the U.S., we are just coming to grips with the realization that increased coverage does not necessarily constitute better and more accessible care. What good is more coverage without doctors to deal with rapidly expanding demand?
A primary care physician shortage in the neighborhood of 50,000 doctors exists, and it grows by the day. It is exaggerated by the fact that some 100,000 of American’s 900,000 doctors are exiting private practice to work shorter hours in hospitals, to retire early, to see fewer patients in overloaded offices, and to enter direct pay independent/concierge/cash-only practices where they practice what they have been trained to do and spend more time with patients rather than wrestling with government and 3rd party paperwork and complying with government mandates.
Tweet: The U.S. and its citizens and physicians are exploring ways to cope with greater demands for care in an aging, doctor-short environment.